Canadian real estate investing is not an easy endeavor even for the seasoned investor that is experienced with the Canadian real estate market. One common mistake of private and professional real estate investors is basing investment decisions on national reports of the real estate market. National averages reporting sales, prices, and market variations are not helpful when investing in Canadian real estate. A more effective approach is to evaluate trends in an individual city or province. This is a more effective method of deciding the investment value of real estate and commercial property.
Canada is a large country and its provinces are separated by massive areas of land. With this being considered, a trend in the Vancouver market is not comparable to a trend in Halifax. Canadian real estate investors need to keep in mind the economic differences in cities when purchasing properties. For example, the average home price in Calgary for 2012 is up 0.2% from 2010; the average home price in Montreal increased 7% from 2010. Clearly investment opportunities across cities are not the same.
In addition to studying local market trends, investors should carefully consider these key economic factors also: job growth, GDP growth, and population increase. These all have an impact on real estate in a certain area. Also, real estate investors should note that Vancouver continuously exhibits strong growth in real estate. Perhaps due to a rising population coupled with the recent investments for the Olympics, the Vancouver market survived the 2008 economic storm. This leaves the question:
Prices are clearly a huge factor in any market. Vancouver and Toronto are typically thought of as the most expensive real estate investment markets in Canada, and also the markets that have shown the most consistent growth. Smaller markets like Winnipeg, Windsor, and Saskatoon have excellent opportunities for affordable real estate investment, but these markets are less attractive to investors due to less stable economic growth.
Relying on past metropolitan trends to predict a specific Canadian real estate segment’s future can be a risky endeavor. Market changes do provide valuable information, but it is more beneficial to predict the economic outlook of a specific area or region. There is no common practice for investing in Canadian real estate because the market differs dramatically in various provinces and cities. Investors need to do their research by region for effective results. However, future investment success cannot be decided by past trends alone. Therefore, investors must study current economic factors also to accurately predict the future success of their Canadian real estate investments.